The passage of the amendments to the Insurance Act has resulted in increased activity in the sector. In an interview with TOI, Insurance Regulatory and Development Authority of India (IRDAI) chairman T S Vijayan clarifies on some of the fine print relating to the liberalization. Excerpts:
Have you directed insurance companies to go public and get listed on the stock exchanges?
We have come out with a discussion paper on this. There is no time frame for this. Having listed companies will improve the level and frequency of disclosures. At the time of liberalization, though it was not specifically mentioned, the spirit of the legislation was that promoters should gradually dilute their stake and there should be professionally managed companies.
There has been some dis cussion on the joint venture companies being `Indian’.Arethere any guidelines on these?
Of the half a dozen or so companies that have sought to raise foreign direct investment, one has received approval.There is an item in the legislation that the companies should have Indian management.We do not have a separate definition of our own. We are only seeking clarification from the companies on how they are ensuring compliance. The Companies Act is very strict on this, but all we are trying to see is whether board representation is in keeping with the ownership. We want that the companies should be board-run and we cannot have a situation where promoters submit an agreement giving the foreign partner all rights.
Does the CEO need to be an Indian? What about chief executive on secondment from the foreign partner?
If the employee who is on secondment from the foreign company is appointed by the Indian board, we do not have any problem. However, in such cases, we will be seeking a clearance from their domestic regulator. This may take some time.
Will the FDI limits be applicable only to insurance companies or to all intermediaries?
The foreign direct investment limit will apply to all intermediaries, includingbrokers, surveyors and third-party ad ministrators. The foreign direct investment limit in these companies will also go up to 49%. It is only in the case of corporate agents, where existing entities can take up insurance broking, that the FDI limits will not apply.
Do you have plans to open up banks for distribution of products of more than one insurance company?
We have allowed banks to sell products of more than one insurance company . There is no compulsion on them to sell products of multiple companies, but we are seeking clarification from them on how they are meeting all the requirements of their clients through this partnership.
When will you open an office in Mumbai?
Our Mumbai regional office is ready and it will be opened in the first week of October. We are planning to have a couple of departments, including inspection department, in this office.
Source : Times of India
Date : 15th Sept, 2015